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BRC Inc. (BRCC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue rose 6.5% year over year to $94.8M with wholesale +14.1%, but gross margin compressed 790 bps to 33.9% and Adjusted EBITDA fell to $2.4M; GAAP net loss widened to $14.5M . BRCC reaffirmed FY25 guidance: revenue $395–$425M, gross margin 35–37%, Adjusted EBITDA $20–$30M .
  • Versus S&P Global consensus, revenue beat ($94.84M vs $92.76M*) and Primary EPS beat (0.0723 vs -0.03*), though GAAP Class A EPS was -$0.07; EBITDA comparability is mixed (company Adjusted EBITDA $2.4M vs SPGI EBITDA consensus $2.0M*) .
  • Management cited coffee inflation, higher trade/promo, and cycling a loyalty program change as margin headwinds; incremental tariffs now expected to hit at least 100 bps in 2H25; pricing taken in May should help into Q3/Q4 .
  • Distribution continues to expand: FDM packaged coffee ACV 56.6% (+14.9 pts YoY), RTD ACV 53.5% (+6.1 pts), and Black Rifle Energy reached ~22.5% ACV and >15,000 doors since launch, underpinning the multi-year growth narrative .
  • Balance sheet bolstered by $40.25M equity raise (July), applied initially to pay down revolver; CFO expects ≥$1M interest savings in 2H25 and improved liquidity to fund Energy rollout into 2026 .

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well
    • Wholesale momentum: channel revenue +14.1% YoY to $61.3M on distribution gains and KDP-supported Energy rollout; CEO: “Black Rifle significantly outperformed the category… delivering 32% sales growth on a 29% increase in unit volume” in FDM vs category +9.6% sales and -1% units .
    • Distribution expansion: packaged coffee ACV to 56.6% (+14.9 pts YoY), RTD to 53.5% (+6.1 pts); Energy to ~22.5% ACV and >15k doors; maintained #3 RTD share and continued outperformance in a contracting RTD category .
    • DTC stabilization ex one-offs: while DTC revenue -7.8% YoY, adjusting for last year’s $2.4M loyalty reserve benefit, sales were “slightly positive” with improved subscription UX and marketplace growth .
  • What Went Wrong
    • Margin compression: gross margin 33.9% (-790 bps YoY) on green coffee inflation (~430 bps), higher trade/pricing (~290 bps), and loyalty program comp (~160 bps); Adjusted EBITDA fell to $2.4M (-$5.1M YoY) .
    • Operating expense mix: marketing +31.8% YoY to 10.3% of sales to support growth; G&A +30.7% driven by legal fees and software depreciation, partly offset by -10.3% in salaries/benefits on ~20% lower headcount .
    • GAAP loss widened: consolidated net loss of $14.5M (vs $1.4M) as gross profit declined and non-routine legal costs rose; company recorded an obsolete raw materials reserve between prelim and final close (minor impact) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($M)$105.9 $90.0 $94.8
Gross Margin %38.1% 36.1% 33.9%
Net Income (Loss) ($M)$(6.7) $(7.8) $(14.5)
EPS (GAAP, Class A)$(0.03) $(0.04) $(0.07)
Adjusted EBITDA ($M)$9.9 $0.9 $2.4
  • Q2 vs consensus (S&P Global): Revenue $94.84M vs $92.76M* (beat); Primary EPS 0.0723 vs -0.03* (beat), while company-reported GAAP EPS was -$0.07; SPGI EBITDA consensus $2.0M* vs company Adjusted EBITDA $2.4M (definitions differ) .

Segment revenue mix ($M)

ChannelQ4 2024Q1 2025Q2 2025
Wholesale$67.2 $56.8 $61.3
DTC$32.2 $27.7 $27.6
Outpost$6.5 $5.5 $5.9
Total$105.9 $90.0 $94.8

Key operating metrics

KPIQ4 2024Q1 2025Q2 2025
FDM Packaged Coffee ACV %48.6% 50.2% 56.6%
RTD Coffee ACV %47.2% 47.9% 53.5%
Energy ACV %N/A21% (first 3 months) 22.5%
DTC Subscribers190,400 181,900 175,500

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY2025$395–$425M (Q1 update) $395–$425M (Q2 reaffirm) Maintained
Gross MarginFY202535–37% (lowered from 37–39% in Q4) 35–37% (reaffirm) Maintained (after prior reduction)
Adjusted EBITDAFY2025$20–$30M (Q1 update) $20–$30M (Q2 reaffirm) Maintained
  • CFO indicated full-year results likely toward the lower end of the ranges given tariffs and coffee inflation, with back-half improvement from pricing, productivity, and lower slotting .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Distribution & ACV2024: packaged coffee ACV +11.5 pts YoY to 48.6%; RTD +3.8 pts to 47.2% . Q1: packaged 50.2%, RTD 47.9%; Energy reached 21% ACV in first 3 months .Packaged 56.6%, RTD 53.5%; Energy ~22.5% ACV and >15k doors .Positive momentum accelerating
Pricing & TradeQ1 gross margin guide cut to 35–37%; higher trade/promo and inflation noted .Pricing action taken in May for packaged coffee; benefits start in Q3, full in Q4 .Offsets building in 2H
Tariffs & Input CostsTariffs added to FY25 gross margin outlook in Q1 .At least 100 bps GM headwind from new import duties in 2H; 40% of 2026 coffee needs forward-locked; neutral GM impact in 2026 if spot stable .Headwinds near term; risk managed
DTC & DigitalQ4 DTC down on lower acquisition; Q1 DTC -15% YoY .DTC -7.8% YoY but slightly positive ex loyalty reserve; improved UX and marketplace traction .Stabilizing/improving
Energy rolloutLate Q4 launch; Q1: 21% ACV with KDP partnership .Disciplined geo rollout; velocities improving at key national customers; CMA-driven expansion in 2026 selling season; not full national in 2026 .Building sustainably
Club channelNot highlighted previously.In programs across all three major clubs; testing to scale .New growth vector

Management Commentary

  • Strategic message: “We remain confident in our ability to accelerate brand growth, deepen consumer engagement, and expand our market presence,” with “strong distribution gains” in packaged and RTD and early Energy momentum .
  • Margin/Costs: “While near-term profitability was affected by coffee inflation, we have begun to mitigate these pressures… The transaction also reduced our net debt and is expected to lower annual interest expense by more than $2 million” .
  • CEO on category outperformance: “Black Rifle significantly outperformed the category delivering 32% sales growth on a 29% increase in unit volume… ACV… rose 15 points to 56.6%” .
  • CFO on FY outlook: “We are maintaining our full-year revenue… and Adjusted EBITDA… we may finish towards the lower end of the range” given headwinds and back-half weighting .
  • CFO on pricing: “We did execute a pricing action across packaged coffee in May… largely across the wholesale market” .

Q&A Highlights

  • 2026–2027 ramp: Management reiterated confidence in multi-year 10–15% growth framework, driven by further ACV expansion in packaged/RTD, DTC stabilization, and Energy scale-up; no segment guidance by line item .
  • Walmart and competition: Takeaway growth near 10% at Walmart despite lapping a lost item; timing effects on internal sales; Fire Dept Coffee not viewed as a direct threat to BRCC trajectory .
  • RTD share vs ACV: Share expected to follow ACV gains with lag; new national customers initially lower velocity but improving; innovation slated later this year .
  • Energy in convenience: Purposefully limited geographies in year one; ACV within launch cities 50–70%; will expand geographies in 2026 with KDP CMA support .
  • Margins and prelim variance: Final GM 33.9% vs prelim due to reserve for obsolete raw materials identified during close (minor effect) .

Estimates Context

  • Q2 2025 actual vs S&P Global consensus:
    • Revenue: $94.84M vs $92.76M* → beat .
    • Primary EPS: 0.0723 vs -0.03* → beat; Company-reported GAAP Class A EPS was -$0.07 (different basis) .
    • EBITDA: SPGI EBITDA consensus $2.0M* vs company Adjusted EBITDA $2.4M (not directly comparable) .

Forward consensus (S&P Global)

MetricQ3 2025Q4 2025Q1 2026
Revenue Consensus Mean ($M)101.3*110.0*100.1*
Primary EPS Consensus Mean ($)-0.01*0.00*-0.01*
EBITDA Consensus Mean ($M)6.23*8.53*4.83*
# of Revenue Estimates3*4*4*
# of EPS Estimates3*3*3*

Values marked with * retrieved from S&P Global.

  • Implications: With FY25 guidance reaffirmed but pacing “towards the lower end,” Street may trim 2H profitability expectations (tariffs + normalization of promo) while raising confidence in revenue cadence given May pricing, distribution gains, and lower slotting in 2H .

Key Takeaways for Investors

  • Revenue beat with distribution-led growth but margin headwinds persisted; expect back-half recovery aided by pricing, productivity, and lower slotting—yet below midpoint of GM/EBITDA ranges per CFO tone .
  • Multi-year growth drivers intact: ACV runway in packaged/RTD, disciplined Energy scale with improving velocities, and new club channel programs expand TAM .
  • Near-term risk skew: coffee inflation and tariffs (≥100 bps GM headwind in 2H) could cap margin upside; management has ~40% of 2026 coffee needs covered and indicates neutral GM impact in 2026 if spot stable .
  • DTC stabilization is a quiet positive—ex-loyalty reserve, DTC is slightly positive YoY with improved UX and marketplace traction, supporting omni-channel efficiency .
  • Liquidity improved via $40.25M equity raise—reducing revolver, lowering interest expense, and funding Energy expansion into 2026; modest EPS dilution offset by growth investment .
  • Trading setup: Watch 2H execution milestones—Q3 pricing flow-through, sequential revenue step-up “at or above $100M” and the Q4 seasonal spike with Cyber Week and holiday foot traffic; delivery here is the next stock catalyst .
  • Estimate revisions: Street likely nudges 2H GM/EBITDA lower-end, but revenue revisions biased up modestly given distribution momentum and pricing realization .